October 21, 2015

VIENNA— In a report released today, the U.S. Environmental Investigation Agency (EIA) provided new evidence to the business practices by the Austrian company "Holzindustrie Schweighofer” (Schweighofer) in Romania. The report documents how Schweighofer processes large amounts of illegally harvested timber from Romanian forests into semi-finished wood products and biomass, selling the products throughout the European Union.

"Schweighofer is one of the largest timber companies in Europe and unfortunately a major driver of illegal logging in Romania,” said Alexander von Bismarck, Executive Director of EIA.

Also today, WWF filed a complaint at the Federal Forest Office in Vienna for violations of the European Union Timber Regulation (EUTR) and calls for a full investigation of the allegations against Schweighofer.

New EvidenceEarlier this year, two videos showing Schweighofer purchasing managers accepting illegal wood were released. A logging truck from a Romanian national park was filmed with a hidden camera as it transported undocumented logs to Schweighofer, despite the company’s claim that it rejects timber from national parks. Over the past year, AGENT GREEN has investigated and exposed a series of cases of illegal or unsustainable logging in national parks and other protected areas.

In the spring of 2015, EIA released an undercover video, in which two of Schweighofer’s senior managers agreed to purchase illegally cut wood and offered boni for it. Today’s report follows two years of investigations and details, for the first time, the extent of the destruction caused by the high volumes of illegal wood reaching Schweighofer’s Romanian mills. EIA found that over 50 percent of logging in Romania is illegal, which includes illegal cutting in national parks, clear-cutting, overharvesting, use of false permits, and logging on stolen land. According to government reports, 20 percent of public forest land have been restituted illegally after the fall of Communism, instead of being returned to the rightful owners. In its investigation, EIA identifies and documents actual cases of each type of illegal logging in the forest and found that in nearly every case the wood was on its way to, or ended up at, Schweighofer’s mills.

AGENT GREEN Director Gabriel Paun said, “In my opinion organized crime structures facilitate the flow of illegal wood from Romania to the European and global markets. So until now the EU and national legislation was not able to stop illegal activities, therefore remains a high risk to buy wood products from many Romanian regions. Europe’s last intact forest landscape is at stake, and two thirds of its virgin forests that are home to the largest populations of brown bears, grey wolves and lynx living in the wild.”

Economic loss for RomaniaEIA’s report also finds that Schweighofer has caused massive damage to the furniture industry in Romania by pushing up prices and buying out timber stocks. According to former Romanian Minister of Environment, Doina Pana, this practice has cost the Romanian economy 50,000 jobs since Schweighofer settled in the country. Schweighofer extracts the profits from its Romanian businesses through a complex network of companies. At the head of this structure sits a private foundation (“Schweighofer Privatstiftung”) registered in Austria, through which the company enjoys significant tax benefits.

Magor Csibi from WWF Romania added that it should be economic common sense to further process wood in Romania in order to create jobs, economic growth for the local communities and more relevant income for the state budget. “Unfortunately, the market became dominated by major actors who took advantage of the legislative gaps and created an economic model which concentrates only on the maximisation of profits, ignoring the sustainability of the forest ecosystems.”

In order to protect their business model, Schweighofer actively tried to prevent a new forest law in Romania that limits the share one single company can have in the national timber market. In a letter to the Romanian Prime Minister, CEO Gerald Schweighofer threatened to sue Romania in international courts and to lay off all of the company’s Romanian employees should the new law not be retracted.

Romania’s forests need EU protectionWWF has, based on available report and information, now filed a complaint according to the EUTR in Austria. WWF has made continuous efforts to save the last remaining virgin forests in the Carpathian region and managed to create legislation proposing 25,000 hectares of virgin forest to become a UNESCO World Heritage Site.

“But today we are calling for a full investigation of all allegations raised in the report. If this fails, then the last Southeast European virgin forests will be turned into wood pellets and burning stoves for the benefit of multinational companies,” warned WWF CEO Andrea Johanides.

The complaint is addressed to the Federal Forest Office (Bundesamt für Wald) which is the responsible EUTR authority in Austria. The EUTR came into force in 2013 and prohibits putting illegally logged timber and timber products onto the EU market. A study by WWF revealed that, unfortunately, this regulation has not been adequately translated in national laws throughout the EU and it furthermore still contains loopholes and exemptions and found penalties for violations too weak to serve as deterrent, in countries such as Austria.

The company SchweighoferThe timber company Schweighofer has existed in Austria for 400 years. Having sold its Austrian sawmills to Stora Enso in the late 1990s, Schweighofer has been active in Romania since 2002, where the company now owns three sawmills and two factories. The company’s main export products are sawn lumber and biomass, in addition to other semi-finished products. Sixty percent of Schweighofer’s exports within the European Union are biomass in the form of pellets, briquettes, and wood chips. Within 13 years, the company became one of the largest wood processors in Europe, with an annual turnover of 465 million Euros.

A system threatening conservation effortsRomania still has an estimated 218,000 hectares of old growth forests. A recent Romanian government study estimated that 80 million cubic meters of timber have been cut illegally in the past 20 years, representing a loss to the Romanian economy of over five billion Euros.

“The company Holzindustrie Schweighofer is not the only player but is by far the biggest on the market, and must therefore not only oblige legal regulations but also has a moral responsibility to do so,” said the NGOs.

Behind the Scenes takes detailed look at how the Austrian timber giant Holzindustrie Schweighofer, one of the largest wood processors in Romania, continues to fuel the destruction of Europe’s last old growth forests, in spite of five years of pledges not to source timber from national parks or protected areas.

Peruvian forest authorities are weakening the tools and inspections necessary to prevent illegal timber trade, in the face of overwhelming evidence that Peru’s exports to the United States, China, Mexico and 15 other countries contained high percentages of illegal or high-risk wood. Moment of Truth, a new report from the non-profit Environmental Investigation Agency, demonstrates the extent of this illegal trade and the backlash against attempts to fight it.